When it comes to invading drug lords, the new kid on the block obviously is not a person of necessary benefit – more like a person of interest. But here, we're not even talking about the kingpin of a cartel or even the hoodie on the street corner making sure a projected drug deal goes down.No, this is a financial arrangement conceived and executed at the highest corporate level that has the potential to throttle the American health care system. Here is what prescription drugs are costing the American citizen:
For more than 100 widely used prescription drugs, retail prices spiked by almost 11 percent in 2013. According to a report from the AARP Public Policy Institute issued on Nov. 20, 2015, such costs, on a chronic basis, exceeded $53,000, surpassing the average U.S. household income of $52,250. It also was more than twice the median income of $23,500 for people on Medicare and more than three times higher than the average Social Security retirement benefit of $15,526 over the same time period.1
Daraprim (pyrimethanmine), a drug originally minted by Burroughs Wellcome in 1953 as a treatment for malaria, re-emerged as a prescription primarily for toxoplasmosis, compromised immune systems caused by HIV/AIDS and some types of cancer, and formerly cost $13.50 per pill. After Turing Pharmaceuticals acquired this medication from Impax Laboratories (after Burroughs Wellcome merged with GlaxoSmithKline, which sold the U.S. rights to CorePharma, which then sold to Turing), they released it to the public at the turbocharged, 5,000 percent price increase per pill to $750.
According to Rima McLeod, medical director at the University of Chicago Toxoplasmosis Center, up to 3 billion of the world's population are infected by the malaria parasite, which attacks the brain. All this information first broke in USA Today on Sept. 18, 2015,2 sparking such a firestorm of public outrage (including a celebrated comment from Hilary Clinton that the price hike was an example of "gouging," causing biotech stocks to tumble3), that Turing was forced to rescind the increase just four days later.4
The CEO of Turing took this opportunity to explain to the public that the price increase was necessary because "drug development costs money." What the CEO didn't share with us, of course, was that this drug has been on the market for 62 years running, so intense development couldn't have been an issue.
What CNBC also pointed out was that these funds were spent for arbitrage (i.e., cornering the market by acquiring rights to the drug) and not for development.5 In other words, this price hike by Turing would have been to burden the public with the costs of the company's playing with stock options.
Turing is not alone in this escapade. Recently, the common drug cycloserine was acquired by Rodells Therapeutics, which pumped up the price of 30 capsules from $500 to $10,800. But then, Rodells handed back the drug to its former owner, a nonprofit entity affiliated with Purdue University, which reset the price tag to $1,050 – about twice the original cost.5
Hepatitis C drugs from Gilead Sciences cost $1,000 a pill or more, while prices for some cancer drugs, which routinely extend a lifespan by only a couple of months, customarily exceed $100,000 a year, some by $150,000. Older drugs for multiple sclerosis, originally priced at $10,000 per year in the late 1990s, now are pegged at annual costs of more than $60,000.6 And for just 12 weeks, one can procure a course of treatment of a new hepatitis medication for the princely sum of $84,000.2
Gleevac, used to treat leukemia, went through a relatively quick and painless delivery through development at Oregon Health & Sciences University. Nevertheless, Novartis put it onto the market in 2001 at $30,000. Now, the price is $90,000.7
The story dates back some years, since in September 2010, after gaining FDA approval for the new drug Gilenya for treating relapsing-remitting multiple sclerosis, Novartis set a wholesale price of $48,000 a year, which even then caused distress.8
We need to realize that the United States, unlike every other advanced country, gives free rein to pharmaceutical companies to set drug prices to their discretion. Going back to Daraprim, for example, Marcia Angell noted in The Washington Post that the parent company, GlaxoSmithKline in the U.K., sells the drug for $0.66 a pill, or just 0.088 percent of what Turing tried to charge. The cost in India is even less.7
What is the process here? As Mary Shepherd, PhD, director of the Center for Pharmacoeconomics at the University of Austin, stated:
"When there are a limited number of drugs on the market and a new drug comes along to compete in the same category, all the drugs in that category jump in price. Even generic drugs rise in price when a new branded drug comes on the market. If there's more competition, drug companies will sell less product, and will raise the price to maintain profit margins as long as they can."8 [Italics mine]
Even though Congress has heard plenty on this subject, with attempts by Rep. Elijah Cummings and Sen. Bernie Sanders to pass a Prescription Drug Affordability Act, this would only allow Medicare to negotiate pharmaceutical drug prices or permit consumers to import cheaper drugs from Canada, as well as require companies to disclose what they charge overseas.
It is not rocket science – or rocket surgery, for that matter – to realize that these spiraling costs find their way to all the insurers other than Medicare. Once there, they are inevitably passed on to the consumer in higher health care premiums, something already happening with most of the major carriers in Massachusetts, as recently chronicled in The Boston Globe.9
There is a clear alternative, which is not to wait for proverbial crumbs to fall, but rather to realize there are, in many instances, alternatives to using massive amounts of medications when not truly necessary. The literature and clinical reports are replete with alternative, noninvasive approaches to rectifying numerous health problems, and we all know chiropractic is among them.
The body of literature supporting cost savings using chiropractic alternatives is impressive. It is obvious that in many ways, chiropractic does appear to be the proverbial elephant in the OR if we are to advance our argument about cost-effectiveness and being able to rescue our health care system from complete overload and breakdown – which is where it will inevitably wind up if these unchecked abuses in pharmaceutical pricing are allowed to continue.
- Schondelmeyer SW, et al. "Rx Price Watch Report: Trends in Retail Prices of Specialty Drugs." AARP Public Policy Institute, last updated November 2015.
- Rushton C. "Company Hikes Price 5,000% for Drug That Fights Complication of AIDS, Cancer." USA Today, Sept. 18, 2015.
- Tirrell M, Mangan D. "Clinton Calls Drug Price Hike ‘Outrageous,' Vows Plan." CNBC.com, Sept. 21, 2015.
- Mitchell A, Helsel P. "Drug CEO Will Lower Price of Daraprim After Hike Sparked Outrage." CNBC.com, Sept. 23, 2015.
- Pollack A. "Big Price Increase for Tuberculosis Drug Is Rescinded." The New York Times, Sept. 21, 2015.
- Pollack A. "Drug Prices Soar, Prompting Calls for Justification." The New York Times, July 23, 2013.
- Angell M. "Why Do Drug Companies Charge So Much? Because They Can." The Washington Post, Sept. 25, 2015.
- Stone K. "Was Turing Pharmaceuticals' 5000% Price Increase a Tipping Point?" Health News Review, Oct. 8, 2015.
- Dayal McCluskey P. "Health Expenses Surging in Mass." The Boston Globe, Jan. 4, 2016.
Click here for previous articles by Anthony Rosner, PhD, LLD [Hon.], LLC.